In the U.S., an exempt manager typically refers to a management employee who is exempt from overtime pay requirements under the Fair Labor Standards Act (FLSA). To qualify for the executive exemption, an employee must meet three main criteria:
- Salary Basis Test
• The employee must be paid a fixed salary that is not subject to reduction based on work quality or quantity.
• The salary must be at least $684 per week ($35,568 per year), though some states have higher thresholds.
- Duties Test
• The employee’s primary duty must be managing a business or a recognized department/subdivision.
• The employee must regularly direct the work of at least two or more full-time employees (or their equivalent).
• The employee must have the authority to hire or fire employees, or their input on such decisions must carry significant weight.
- Primary Duty Test
• Management must be the employee’s main job, meaning they spend more than 50% of their time on managerial tasks in some states (like California), or that management is their most important duty under federal law.
Additional Considerations:
• Highly Compensated Employees (HCEs) earning at least $107,432 per year may qualify for exemption if they perform at least one of the duties of an executive, administrative, or professional employee.
• State Laws May Differ – Some states (like California and New York) have higher salary thresholds and stricter rules for exempt employees.
Would you like details on how a specific state applies these rules?